GBP/USD has recorded slight losses for a second straight day. In the European session, the pair is trading at 1.3194, down 0.22% on the day.
British GDP rebounds in Q3
The British economy rebounded in impressive fashion in the third quarter, with a gain of 15.5 per cent. This follows the GDP reading in Q2 of -20.4%, which was a record low. However, the strong Q3 reading fell short of the consensus of 15.8%, and the pound has dipped lower on Thursday. The monthly GDP report for September also missed its estimate of 1.5%, posting a gain of 1.1 per cent. This was the lowest gain since May.
Industrial numbers also fell short in September. Industrial production rose from 0.3% to 0.5%, but this missed the forecast of 0.9%. Manufacturing Production slowed to 0.2%, down from 0.7%. This was short of the estimate of 0.7%. The small gain was the worst showing since April, when the indicator plunged 24.3 per cent.
Brexit negotiations in final stage
The talks between the European Union and the UK are scheduled to continue next week, as the sides try to hammer out a post-Brexit trade agreement. With the deadline of Dec. 31 looming ever closer, it remains unclear if a deal can be reached in time. Ireland’s foreign minister, Simon Coveney, sounded pessimistic, saying that reaching an agreement would be “very difficult”. British Prime Minister Johnson has played hardball with the Europeans and has said in the past that it would be a “good thing” if the UK were to leave the EU without a deal in place. If that happens, the two sides will be bound by World Trade Organisation trade rules, which could mean tariffs on a range of imports and exports. Another unofficial deadline for reaching a deal has been set, that being the European Summit on Nov. 19. If no deal is announced by then, it would be a strong indication of a no-deal Brexit, which could spell bad news for the British pound.
GBP/USD Technical
- GBP/USD tested support at 1.3171 in the Asian session. Below, there is support at 1.3120
- The pair faces resistance at 1.3294, followed by resistance at 1.3366
- There is a pivot point at 1.3243. GBP/USD is trading below this line, which indicates bearish sentiment
- GBP/USD broke below the 20-day MA earlier in the week, another sign of a downswing